Fuel Economy Standards Are a Costly Mistake

Corporate Average Fuel Economy (CAFE) standards are adding thousands of dollars to the prices of new cars. When the Obama Administration began implementing Congress’s stricter CAFE standards in 2009, scholars predicted that the standards would cost consumers at least $3,800 per vehicle. Vehicle prices, which had been falling, began rising in 2009 and have not stopped. The average vehicle now costs $6,200 more than if prices had followed their previous trend. Prices will continue to rise, by at least $3,400 per car through 2025, unless this costly policy mistake is undone.

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